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Investment Exclusions

As a prudent fiduciary committed to the missions of its institutional investors, WII recognizes and conducts both "values-based" and "value-adding" investment activities.

Values-based investing seeks to align shareholders with their convictions. We look to The United Methodist Church's (UMC) Social Principles, The Book of Discipline and The Book of Resolutions for guidance here; these texts are the foundation of our ethical exclusions policy.

Value-adding activities, on the other hand, seek to improve investment results. As it relates to investment exclusions, WII's Board of Directors adopted policies on the Management of Excessive Sustainability Risk (MESR). Under our MESR policies, we recognize and exclude investments that expose our funds to high levels of sustainability-related financial risk.

Ethical Exclusions

We avoid investments in any company or entity whose core business activity* involves the production and/or assembly, direct sale, distribution, and/or marketing of the following products and/or services:

Excluded investment Options

* Generally, a "core business" is one that accounts for 10% or more of a company’s revenue derived from the objectionable products and/or services and discontinuing the activity would materially change the nature of the company’s operations. Different thresholds apply for restaurants and other food retailers, as well as suppliers of key components to the products and/or services included in our policy. For our full ethical exclusions policy, please review Wespath's Investment Policy.

Sustainability-Related Financial Risk Exclusions

In instances where a particular issue or set of companies or industries expose investors to high levels of sustainability-related financial risk, our board may adopt guidelines to exclude certain investments. To date, our board has adopted two MESR-related investment guidelines:

coal truck
Climate, with a specific focus on thermal coal and companies assessed as “high risk” of failing to adequately adjust their business model to the low-carbon transition

Human Rights Dove
Human rights, with a specific focus on high-risk operating areas


Q & A: MESR Guidelines

  1. What led Wespath to adopt the climate and human rights guidelines?

    Wespath actively pursues strategies designed to address the risks from investing in companies with inadequate management of sustainability issues. We share the concerns of many of our stakeholders regarding the importance of addressing climate change and protecting human rights. Moreover, these guidelines provide direction for identifying and managing the excessive sustainability risk that could potentially affect the value of assets held on behalf of our investors.

  2. What was Wespath’s process in developing these guidelines?

    Wespath recognized that as a long-term investor, excluding companies we believe pose sustainability-related financial risks is a function of prudent fiduciary investment management. In preparing the MESR guidelines, Wespath studied the United Methodist Social Principles to understand the Church’s positions regarding climate change and human rights. We listened to important voices knowledgeable about these two topics within and outside the Church. Wespath jointly convened (with the General Board of Global Ministries) the UMC’s Human Rights and Investment Ethics Task Force, and it continued to build on that collaboration with three UMC general agencies. In addition, we collaborated with other leading sustainable investment asset owners in the U.S. and abroad.

    Over time, we have evolved the MESR policy and the guidelines to reflect our current understanding of sustainability risks based on additional research, engagement dialogues and insights from our strategic partners. The Heartland Initiative, a not-for-profit organization focused on human rights, provides technical support for our human rights-related engagements and implementation of the MESR guidelines. Organizations focused on climate change include the World Resources Institute, the Carbon Tracker Initiative, Climate Action 100+ and the Transition Pathway Initiative. Our global sustainability research provider, Institutional Shareholder Services (ISS), provides data relevant to both the climate change and human rights guidelines.

  3. Why are these guidelines important for prudent investment management of investment funds? Is it possible they could hurt performance since their application results in limiting the number of investable securities?

    Wespath believes that developing and adopting these and other guidelines that address sustainability issues is a function of prudent fiduciary investment management. We strongly believe that these guidelines will lead to improved investment performance by addressing the investment risk created by investing in companies with unsustainable business policies and practices.

  4. What might cause Wespath to add other guidelines to the MESR policy?

    Our Investment Beliefs and Sustainable Economy Framework guide all the stewardship decisions we make on behalf of our participants and institutional investors. As such, we continuously monitor the material risks that could adversely impact the investment performance of our funds, and we seek to address these risks through prudent stewardship, with guidance and insight from our board of directors, senior leaders, asset managers, investment partners and others. If we determine there is a low probability that we can mitigate a material risk through engagement, we may develop a guideline to exclude investments affected by that risk.